The majority of healthcare providers (physicians, dentists, etc.) obtain payment for medical services provided to a patient from a payer, which is generally a healthcare organization or insurance company administering a plan for the patient's employer. The form that is submitted from the healthcare provider to the payer is called a “claim.” A claim is typically filled out by the healthcare provider. The claim should indicate all information required by the payer for payment of the healthcare provider for the service rendered to a patient. A properly completed claim typically identifies the physician that provided the service, a service identification code, the patient, the patient's group and plan number, payer identification, the amount of the claim, co-payment amount, etc.
There are two primary methods by which providers may submit claims to the payers:                1) send the claims on paper using a standard paper form called a HCFA 1500 form; or        2) send the claims electronically.If the provider selects to send the claims electronically, they generally have two options:        1) a direct method that utilizes a software application provided by a payer that only accepts claims for that payer; or        2) a clearinghouse method that utilizes a software package provided by a clearinghouse that enables a provider to submit claims to multiple payers.Typically, if a provider elects to submit all or a portion of their claims electronically, they will rely on their practice management software (PMS) vendor to facilitate an interface between their electronic connectivity solution and their PMS system. The transportation of claims from the provider's office to the payer can occur via direct dial up connection using a modem or via the Internet.        
Once the claims are submitted, the payer then checks the claims to ensure that the information contained in the claim is in proper format. For example, certain service identification codes may only be five digits and have certain values uniquely identifying the service provided. In addition, the data is checked to ensure it makes sense in context. For example, an adult male patient visiting an obstetrician for a child wellness visit would cause the payer's processing system to reject the claim. A male patient should never have need of such obstetric services, and an adult would not properly receive services in connection with a child wellness visit. These checks are implemented by the healthcare payer's claim processing system are implemented as ‘rules’ embedded in the code of the payer's claim processing system. In some cases these ‘rules’ are included in the claims submission software application that resides in the providers office, whether the provider is using the direct or clearinghouse method for submitting claims. Payers have a vested interest in improving the quality of the rule edits that reside in front of the payer's claim processing system.
By editing the claims at the time of submission, the provider receives notification of any problems with the claim immediately, which enables the provider to correct the claim and resubmit the claim. This process reduces the delays in the payment process, which leads to improved provider relations and results in fewer calls from the provider to the payer's support center, thereby reducing cost for both the provider and the payer. Furthermore, by editing the claims at the time of submission, the payer avoids the expense of accepting the claim, processing the claim, and facilitating the return of the information required to correct the claim. Accepting claims that will ultimately fail in the payers system generates increased expense for the payer as well as delay in the payment of the claim. However, these edits are not easily changed once embedded in the code to accommodate rule updates, even by skilled programmers familiar with the computer language in which the rules are implemented.
In addition to rejecting claims for format and contextual errors, payers may also reject claims for reasons related to patient or provider eligibility. In those cases the claim may reject because:                1) the patient is not covered by the plan or the provider is not registered with the payer;        2) the patient or provider is not properly registered with the payer;        3) services that were rendered by the provider are not covered under the patient's payer plan;        4) the information identifying the patient or provider was submitted incorrectly; or        5) 5) the claim was filed after the timely filing deadline.Furthermore, claims may reject for reasons related to authorizations. Authorizations are granted by payers to patients seeking access to specialists or providers other than their primary care provider (PCP). If the proper authorization has not been granted by the payer prior to claims submission, the claim may rejected.        
The amount of information available to a provider about the status of their claims once they have sent them can vary dramatically, depending on the payer, the clearinghouse and the method used to submit the claims. In general there are three basic categories for the types of messages that can be returned:                1) claim File Acknowledgement—indicates the status of the claim file that was sent by a submitter. This report simply indicates whether or not the file was received and accepted by the payer.        2) claim Level Acknowledgement—preliminary status that indicates whether or not a claim has passed the first phase of editing. A claim accepted at this point is not a guarantee of payment.        3) Electronic Remittance Advice (ERA)—final report indicating acceptance or denial of the claim. If the claim is accepted, in whole or in part, it will also indicate payment amounts.Even when these reports are available electronically, there is no guarantee that the clearinghouse intermediary will make these reports available to the provider.        
Even when information is available there is little or no consistency in the messages that are returned by the different payers. As an example, a provider could receive a different message for the same claim error from each of the payers to which they submit claims. In many cases the provider must contact the payer to obtain clarification about the exact cause for a claim rejecting.
Once a claim is submitted from the healthcare provider to the payer, the healthcare provider often has limited information regarding the status of the claims. Therefore, the provider is unaware of problems in the processing of claims that could be remedied to obtain faster payment of the claim.
What is needed is an all payer, universal system that can ensure that the appropriate format for each particular payer's requirements, the information contained within the claim conforms to the appropriate content specifications, and checks to determine the patient's and provider's ability to receive reimbursement from the payer, when such information is available. If the claim is incorrect, then the claim should be rejected at the time of submission and the provider should receive immediate notification that details the errors.
Once claims in the correct form are received, the system needs to format the claims according to each payers requirements and transmit the claims. Thereafter, the payer applies its rules and either rejects or accepts the claims. This information should be readily accessible by the provider to determine a claim's status. The system should enable the provider to use these status indicators to perform summary or detailed queries as to the overall status of their billing and quickly and efficiently identify claims that require attention. Ideally, the system would allow the provider to determine the status of a claim at all stages of its processing and receive proactive reports indicating when claims have either rejected or when important information is delayed.